RBC profit rises 12 percent; bank raises dividend

TORONTO (Reuters) - Royal Bank of Canada RY.TO reported a stronger-than-expected 12 percent rise in quarterly profit on Thursday on the back of stronger loan growth and capital markets income, prompting the bank to raise its dividend by 5 percent.

The bank, Canada's largest, earned C$2.07 billion ($2.05 billion), or C$1.36 a share, in the first quarter ended Jan 31. That compares with a year-earlier profit of C$1.86 billion, or C$1.22 a share.

Excluding special items, the bank earned C$1.38 a share, beating analysts' expectations of C$1.31, according to Thomson Reuters I/B/E/S.

The profit gain was driven by a 25 percent rise in capital markets income, which benefited from higher U.S. lending and loan syndication as well as merger and acquisition activity. The division, which RBC has been expanding in the United States and Europe in recent years, earned C$464 million.